California faculty district wins authorized problem to bonds

California’s San Juan Unified College District claimed an appellate court docket win in a case that challenged the Sacramento County district’s use of bond proceeds.

The result gives what Orrick, Herrington & Sutcliffe Accomplice Khai LeQuang, who represented the district, calls elevated readability for California faculty districts.

The opinion by the California Court docket of Attraction, Third Appellate District, upholds a district court docket ruling and affirms the broad discretion afforded to highschool districts below Proposition 39 for modernizing and changing getting older services, he mentioned.

The case, Creedon et al. v. San Juan Unified College District, centered on a lawsuit filed by two taxpayers who argued that the language of Measure P, a 2016 bond measure, didn’t allow the demolition of a former elementary faculty constructing to construct a brand new center faculty.

The plaintiffs contended {that a} brand-new construction couldn’t be thought-about a part of the “venture listing” as required by Proposition 39, which governs how faculty districts can safe voter approval for bond measures.

Proposition 39, authorised by voters in 2000, permits faculty districts to safe common obligation bond approval from voters with 55% of the vote, slightly than the prior two-thirds requirement, if, amongst different issues, they define by way of a venture listing an ample description of what they may spend the cash on.

On Sept. 2, the appeals court docket upheld the trial court docket’s abstract judgment order, confirming that the varsity district’s use of bond funds was approved. The appellate court docket additionally dominated that the plaintiffs’ broader challenges to Measure P have been time-barred.

The opinion “gives an essential roadmap on how faculty districts could draft bond measures and method future challenges to spending Proposition 39 bond funds,” LeQuang, who led Orrick’s staff alongside senior affiliate Kristopher Wooden and affiliate Kelli Ward, advised The Bond Purchaser.

“The victory safeguards a important part of SJUSD’s long-term services plan, clears any doubt over the validity of the expenditures on the now-completed and extremely profitable state-of-the-art middle-school campus, and affirms broad voter-approved discretion for California faculty districts to modernize and change dated buildings,” LeQuang mentioned.

The lawsuit particularly aimed to dam SJUSD from allocating $56 million in Measure P proceeds to interchange the campus of the previous Creekside Elementary College with a newly constructed Katherine Johnson Center College. The plaintiffs argued that Measure P’s constitutionally and statutorily mandated venture listing didn’t authorize this new development and relocation venture.

Their core allegation was that the expenditure violated California’s structure and the College Bond Waste Prevention Act as a result of the venture listing didn’t explicitly establish Katherine Johnson Center College as a faculty eligible for bond-funded tasks.

On the time Measure P handed, LeQuang mentioned, Katherine Johnson Center College was nonetheless a part of Encina Preparatory Excessive, which was, actually, recognized on the venture listing. Crucially, Measure P additionally expressly approved tasks on the Creekside property, he mentioned.

The plaintiffs’ attorneys by no means sought an injunction, which might have halted progress on the center faculty venture through the litigation, LeQuang mentioned. In consequence, Katherine Johnson Center College has been operational since January, regardless of arguments within the case solely being heard just a few months in the past.

A key side of the court docket’s choice concerned the statute of limitations.

The plaintiffs tried to contest the vagueness of the unique language within the bond measure. Nevertheless, the Superior Court docket dominated that any challenges associated to the bond measure’s preliminary language have been time-barred. LeQuang mentioned such arguments would have wanted to be introduced inside 60 days of Measure P’s passing in 2016, or inside 60 days after the primary bonds from the measure have been bought in 2017.

The trial court docket choose did, nevertheless, deem the argument relating to whether or not the brand new faculty constructing may very well be thought-about a part of the venture listing as a suitable foundation to problem using bond proceeds, and this was the argument thought-about within the appellate ruling.

Orrick first secured a victory in Sacramento County Superior Court docket, which granted SJUSD’s movement for abstract judgment in full. The decrease court docket held that the plain language of Measure P explicitly permits new development, relocations, demolitions, and replacements “in any respect present and future district-owned properties,” together with tasks involving Encina Preparatory Excessive College (from which the middle-school program was separated) and the Creekside website.

The appellate court docket unanimously affirmed this choice, and awarded SJUSD its prices of attraction. The three-judge attraction panel concluded that Measure P’s textual content “approved using bond funds for development of the brand new Katherine Johnson Center College” and concurred that challenges to Measure P’s validity have been premature below the 60-day limitations interval for bond validation actions.

LeQuang famous that in issuing an unpublished opinion, the appeals court docket judges have been basically stating that they “did not suppose the plaintiffs had offered one thing new, which is nice for college districts.”

This ruling, he added, acknowledged that broad language is permissible in bond measures and may be successfully used to authorize tasks.

This ruling, he mentioned, aligns with a big precedent set by the California Supreme Court docket within the 2008 Foothill-DeAnza case.

In that case, the Supreme Court docket denied a petition for evaluate from plaintiffs difficult the Foothill-De Anza Neighborhood Faculty District’s plans to difficulty $490.8 million from its Measure C bond. That call meant the appeals court docket’s ruling locally faculty district’s favor stood, establishing a benchmark for a way judges ought to interpret Proposition 39 parameters in bond measure language.

“I feel the taking part in discipline could be very favorable for these sorts of broad language measures,” LeQuang mentioned. “I feel there’s all the time the danger that folks will problem them if they are not particular. However I do not suppose Proposition 39 requires the specificity that plaintiffs have been asking for.”

With a Proposition 39 measure, “it is okay to be broad, however being obscure is an issue when it is not clear what the bond language means.”

This end result is important for college districts, mentioned Adam Bauer, chief govt officer for Fieldman Rolapp & Co., a monetary advisory agency specializing in class districts. Bond measures are sometimes authorised a decade or extra earlier than development commences, throughout which period circumstances can drastically change, Bauer mentioned.

For example, the widespread influence of synthetic intelligence in 2025 couldn’t have been foreseen in 2016 when Measure P handed, very like the longer term significance of Wi-Fi many years in the past.

“College districts are in a tough state of affairs, as a result of voters need specificity and to know what the cash will probably be spent on, however many capital applications evolve over a 10-year time-frame,” Bauer mentioned. “You may have constructing codes change or expectations of what the varsity choices ought to be change over time.”

The Creedon case gives a priceless information for college districts and their monetary advisors as they put together to draft bond measures for voter approval in November 2026. Bauer anticipates a higher-than-usual variety of faculty districts searching for voter approval then, largely because of a backlog of tasks requiring funding to renovate and preserve getting older services.

Traditionally, prime instances for bond measures align with mid-term congressional and presidential elections. One other requirement of Proposition 39 is that the bond elections have to be held along side different commonly scheduled elections.

“There’s a very excessive degree of curiosity in placing measures on the poll,” Bauer mentioned of his agency’s shoppers.

Getting old services and suppressed demand from current election cycles are driving the curiosity in floating bond measures, he mentioned.

In March 2020, on the onset of COVID-19 closures and financial uncertainty in California, there was a excessive failure fee for bond measures, which had a “chilling impact,” deterring different faculty districts from shifting ahead in 2022.

Whereas 2024 noticed a excessive success fee, there stays important “pent-up demand” for important faculty infrastructure tasks.

LeQuang mentioned the appellate ruling not solely validates SJUSD’s actions but in addition gives a strong authorized framework that may allow California faculty districts to extra confidently pursue vital capital enhancements for his or her services, making certain they’ll adapt to evolving instructional wants and preserve trendy studying environments for college kids.

“I’d say because it’s an unpublished opinion, the court docket is snug with the place the world stands,” LeQuang mentioned. “This reinforces that districts can use broad language and doubtless ought to in the event that they wish to have flexibility.”

The plaintiffs’ attorneys couldn’t be reached for remark.